Should you refinance your student loans? Best lenders to consider

If your student loans have a high interest rate, you may be considering refinancing as a way to lower your student loan costs. While federal student loan payments and interest are currently suspended through Aug. 31, 2022, the Federal Reserve recently raised interest rates and may do so again. Refinancing now may allow you to lock in a low rate and save money.

Student loan refinancing lets you bundle all or some of your loans into a single new loan, often at lower rates. Here’s a look at how to refinance student loans, as well as some options for refinancing.

• Best student loan refinance lenders
• How to refinance student loans
• Pros and cons of student loan refinancing
• Student loan refinance FAQs

Best student loan refinance lenders

Interest rates aren’t the only factor to consider when choosing a student loan lender. Some lenders offer better customer service, more convenient payment options, or flexibility if you have trouble making payments.

Advantage Education Loan

Advantage Education Loan offers refinancing to borrowers who haven’t completed their degrees. If you initially apply with a cosigner, you may be able to have your cosigner released from the loan after 12 consecutive months of on-time payments.

• Loan amounts: $7,500 to $500,000
• Loan terms: 10, 15, or 20 years
• Repayment options: Immediate repayment, forbearance, loans discharged upon death or disability
• Fees: None
• Discounts: Autopay

Brazos

Brazos works with borrowers who have a credit score of at least 720, a minimum income of $60,000, and are Texas residents. The lender doesn’t charge origination fees or prepayment penalties.

• Loan amounts: $10,000 to $400,000
• Loan terms: 5, 7, 10, 15, or 20 years
• Repayment options: Military deferment, forbearance
• Fees: Late fee
• Discounts: Autopay

Citizens

Citizens Bank offers refinancing for borrowers who are U.S. citizens or permanent residents and have at least $10,000 in student loans. Borrowers can choose between a fixed- or variable-rate loan.

• Loan amounts: $10,000 to $750,000
• Loan terms: 5, 7, 10, 15, or 20 years
• Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay, loyalty

College Ave

College Ave offers student loan refinancing in all states except Maine. The lender offers fixed- and variable-rate loans, no application or origination fees, and interest rate reduction when you sign up for automatic payments from your bank account.

• Loan amounts: $5,000 to $300,000
• Loan terms: 5, 7, 10, 12, 15, or 20 years
• Repayment options: Military deferment, forbearance, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay

EDvestinU

EDvestinU works with borrowers who are U.S. citizens or permanent residents with two personal references. The lender offers fixed- and variable-rate loans and a discount for setting up automatic payments.

• Loan amounts: $7,500 to $200,000
• Loan terms: 5, 10, 15, or 20 years
• Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability
• Fees: None
• Discounts: Autopay

INvestEd

INvestED offers refinancing for borrowers with a FICO Score of at least 670, an annual income of at least $36,000, and continuous employment for the last year. If you initially apply with a cosigner, you may be able to have your cosigner released after making 48 consecutive, on-time payments.

• Loan amounts: $5,000 to $25,000
• Loan terms: 5, 10, 15, or 20 years
• Repayment options: Academic deferment, military deferment, forbearance
• Fees: Late fee
• Discounts: Autopay

ISL Education Lending

ISL refinancing is available in all 50 states and can usually fund loans within one business day. The lender offers graduated repayment plans, where you start out with lower payments that increase gradually over the life of your loan.

• Loan amounts: Up to $300,000
• Loan terms: 5, 7, 10, 15, or 20 years
• Repayment options: Academic deferral, military deferral, forbearance, death or disability discharge
• Fees: None
• Discounts: Autopay

MEFA

The Massachusetts Educational Financing Authority works with borrowers who have made 12 on-time payments in the previous months on all loans being refinanced. The application process takes about 15 minutes, your application can be approved within 10 to 14 days, and your loan will be disbursed within the next five business days.

• Loan amounts: $100,000 up to the total amount
• Loan terms: 7, 10, or 15 years
• Repayment options: Military deferment, loans discharged upon death or disability
• Fees: None
• Discounts: None

PenFed Credit Union

PenFed has been around for 85 years. The lender offers refinancing to borrowers who are U.S. citizens and have at least $7,500 in student loans.

• Loan amounts: $7,500 to $300,000
• Loan terms: 5, 8, 12, or 15 years
• Repayment options: Does not disclose
• Fees: None
• Discounts: None

RISLA

Rhode Island Student Loan Authority offers refinancing for eligible loans that were used at a college located in any state. The lender doesn’t charge application fees or origination fees.

• Loan amounts: $7,500 to $250,000
• Loan terms: 5, 10, or 15 years
• Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability
• Fees: None
• Discounts: Autopay

SoFi

SoFi is available to borrowers in all 50 states. The lender offers fixed and variable rates, and discounts when you sign up for autopay.

• Loan amounts: $5,000 up to the full balance
• Loan terms: 5, 7, 10, 15, or 20 years
• Repayment options: Academic deferment, military deferment
• Fees: None
• Discounts: Autopay, loyalty

You can easily compare prequalified rates from the above lenders using Credible.

Other lenders to consider

ELFI

Education Loan Finance provides student loan refinancing for borrowers with at least $15,000 in student loan debt and a bachelor’s degree or higher from an approved school. The lender never charges application fees, origination fees, or prepayment penalties.

• Loan amounts: No maximum
• Loan terms: 5, 7, 10, 12, 15, or 20 years
• Repayment options: Forbearance
• Fees: None
• Discounts: None

Methodology

Credible evaluated private student loan lenders in 10 different categories to determine the best lenders for student loan refinancing. This included interest rates, repayment options, terms, fees, discounts, customer service availability, as well as eligibility requirements and cosigner release options.

How to refinance student loans

Refinancing your student loans is usually easier than it sounds. You simply need to find the financial institution offering you the best deal, apply for the loan, then wait for the lender to pay off your old loans. Here’s the step-by-step process:

1. Compare rates from multiple lenders

A variety of banks, credit unions, and online lenders refinance student loans. Shopping around ensures you get the lowest rate available. Most lenders will also give you an idea of the rates and loan repayment plans available to you with just a soft credit check, so you can shop around without affecting your credit.

2. Select the best offer

Once you’ve compared a few offers, it’s time to choose your lender and loan. Most borrowers go with the lender that offers the lowest interest rate, but it helps to use a student loan refinancing calculator to see how much you’ll actually save based on the interest rate and loan term.

3. Fill out the application

To lock in your interest rate, you’ll need to submit an official application. Many lenders allow you to apply online and upload the required documents, such as copies of your most recent loan statements and proof of income. The lender will also run a hard credit check at this point, which can temporarily lower your score.

4. Loan approval and payoff

It usually takes a couple of weeks for lenders to process and approve your application and pay off your old loans. In the meantime, continue to make payments on your old loans.

5. Set up automatic payments

Once your new loan has been finalized, set up automatic payments to help ensure you don’t miss a payment. Many lenders also offer a small rate discount when you set up automatic payments.

Pros and cons of student loan refinancing

As with any financial decision, refinancing student loans might not be right for every borrower in every situation. Before deciding whether to refinance student loans, be sure to weigh the pros and cons.

Pros

• A lower rate can help you save money. Many people have limited credit when they initially take out their student loans and thus wind up paying a high interest rate. If you’ve built a strong credit history since you first took out your student loans, you may qualify for a lower annual percentage rate (APR), which can help you pay off your loan faster and pay less interest over the life of the loan.
• Combining several loans can simplify your finances. You may have multiple student loans spread across several loan servicers, all with different due dates. Merging those loans into one loan with one servicer and one monthly payment will simplify your payments, possibly helping you avoid missed or late payments.
• You may be able to release your cosigner. If your parent or another family member cosigned for your existing student loan and your credit score has since improved, refinancing can release them from backing your loan.

Cons

• You can lose federal repayment options. Refinancing from federal loans into private loans means losing out on some federal student loan borrower protections. This includes the ability to put your payments on deferment or forbearance if you lose your job or face other financial difficulties or decide to go back to school. Some private lenders offer deferment and forbearance options, but they’re usually not as generous as those offered by the federal government.
• You lose Public Service Loan Forgiveness options. Teachers, healthcare workers, and other professionals may be able to have their federal student loans forgiven under the Public Service Loan Forgiveness (PSLF) Program. Refinancing into a private loan means losing access to this program.
• Your variable interest rate may increase. Interest rates on federal student loans are fixed. Private student loans may have fixed or variable rates. If you choose a variable-rate loan because it has a low rate, that rate may increase over time.

Student loan refinance FAQs

Here are answers to some of the most common questions about refinancing student loans.

Should you refinance your student loans during the COVID-19 pandemic?

That depends on whether you have federal or private student loans. Currently, many federal student loan borrowers don’t have to make payments on their loans, and the federal government is waiving interest on these loans while the payments are paused. This administrative forbearance lasts until Aug. 31, 2022. If you refinance federal student loans into private student loans, you’ll lose that benefit.

How do you qualify for student loan refinancing?

Each bank, credit union, or other lender has its own eligibility requirements. Some common criteria include:

• Good credit — The minimum credit score requirements vary by lender, but most private lenders prefer to work with borrowers with good credit — a FICO Score of at least 670 or above. Having a higher credit score can also help you qualify for a lower interest rate.
• Verifiable income — Lenders will need to verify exactly how much you earn. They may do this by requesting copies of your pay stubs, bank statements, tax returns, or an offer letter from an employer. You may need to provide employer information so the lender can verify that you’re still employed.
• Low debt-to-income ratio — A high debt-to-income ratio signals to loan companies that you may not be able to afford your payments. Most lenders require a debt-to-income ratio no higher than 50%.
• Loan information — Lenders will need your current loan information, including the lender’s name, contact information, loan balance, and account number. They’ll use this information to verify the payoff amount and send a final payment to your old lender.
• Payment history — Some lenders work only with borrowers who have a history of on-time payments on their loans and no bankruptcies or foreclosures in the past few years.

Will applying for student loan refinancing hurt your credit?

When you’re ready to officially apply for a loan, the lender will need to perform a hard inquiry. A single hard inquiry will cause most people’s credit scores to drop by less than five points, according to FICO.

Can you refinance your student loans more than once?

There’s no limit to the number of times you can refinance your student loans. If you qualify for a lower rate, refinancing twice or more can help you save even more money.

But before you do, be sure to read the fine print. For example, some lenders charge origination fees, which can eat away at the money you’d save by refinancing. And some lenders might lower your rate but stretch your repayment term over more years.

For that reason, be sure to do your research and run any offer you receive through a student loan refinancing calculator to ensure refinancing again will help you accomplish your goals.

What types of loans are eligible to be refinanced?

Both federal student loans and private student loans can be refinanced. Just keep in mind that refinancing federal student loans into a private loan means losing some of the benefits of federal student loans, including income-driven repayment plans, loan forgiveness, deferment, and forbearance.

​​What’s the difference between student loan refinancing and student loan consolidation?

People often use the terms loan refinancing and loan consolidation interchangeably, but there is a difference.

You can refinance a single student loan into a new loan with a new rate and term. A consolidation combines two or more loans into one new loan with one monthly loan payment.

Consolidation of student loans typically refers to federal student loans. You may be able to consolidate some of or all your federal student loans into a federal Direct Consolidation Loan or combine your loans by refinancing into a private student loan.

For private student loans, consolidating into a federal consolidation loan isn’t an option — you can only combine private student loans through another private lender or bank.